ZVIA 10-K & 10-Q changes, risk factors and insider trading

We operate in the highly competitive commercial beverage industry that continues to evolve in response to changing consumer preferences. Some of our competitors, such as The Coca-Cola Company, Keurig Dr. Pepper, PepsiCo, Inc., National Beverage Corp., Monster Energy, and Red Bull, are multinational corporations with significantly greater financial resources than us. These competitors can use their resources and scale to rapidly respond to competitive pressures and changes in consumer preferences by introducing new products, changing their route to market, reducing prices or increasing promotional activities. For example, both PepsiCo and the Coca-Cola Company have begun focusing in on the better-for-you space, with the PepsiCo's acquisition of Poppi and Coca-Cola Company launching a prebiotic soda “Simply Pop” this year.. We also compete with a range of other brands, including prebiotic soda brands like Poppi and Olipop, and a variety of smaller, regional and private label manufacturers. Smaller companies may be more innovative, better able to bring new products to market and better able to quickly exploit and serve niche markets. If we are unable to effectively compete in the commercial beverage industry, we may not be able to maintain or improve the market position of our brand.

We sell a substantial portion of our products to specific customers. In 2024,2025, our largest customer represented 13%14% of our net sales and our second and third largest customercustomers each represented 11%12% of our net sales, and our largest ten customers represented 71%75% of our net sales. No other customers represented more than 10% of our net sales in 2024. In 2024, the e-commerce channel represented approximately 12% of our net sales.2025. The loss of any large customer, the reduction of purchasing levels or the cancellation of any business from a large customer for an extended length of time could negatively impact our sales and profitability. We expect that most of our sales will be made through a small number of customers for the foreseeable future. For these customers, we do not have short-term or long-term commitments in our contracts that ensure future sales of our products. If we lose one or more of our significant customers and cannot replace the customer in a timely manner or at all, our business, results of operation and financial condition may be materially adversely affected. Similarly, if we do not maintain our relationship with existing customers or develop relationships with new customers, the growth of our business may be adversely affected and our business may be harmed. Consequently, our financial results may fluctuate significantly from period to period based on the actions of one or more significant retailers. A retailer may take actions that affect us for reasons that we cannot always anticipate or control, such as their financial condition, changes in their business strategy or operations, a reduction in the number of brands they carry, a reduction or shift of shelf space, the introduction of competing products or the perceived quality of our products. There can be no assurance that retailers will provide sufficient, or any, shelf space, nor that online retailers will provide online access to, or adequate product visibility on, their platform. Despite operating in different channels, our retailers sometimes develop their own beverages that compete for the same consumers. Because of actual or perceived conflicts resulting from this competition, retailers may take actions that negatively affect us. For example, we have had retailers develop brands that compete with our brand and as a result, saw a shift in our shelf space in store to private label and competitive products. In addition, our success depends in part on our ability to maintain good relationships with key retail customers.

Noncompliance with applicable food product quality and safety regulations can result in enforcement action by applicable regulatory agencies, including product recalls, market withdrawals, product seizures, warning letters, untitled letters, injunctions, or criminal or civil liability. Such incidents could also expose us to product liability, negligence or other lawsuits, including consumer class action lawsuits. Any claims brought against us may exceed the limits or be outside the scope of our existing or future insurance policy coverage. Any judgment against us that is more than our policy limits, not covered by our policies or not subject to insurance would have to be paid by us, which would affect our results of operations and financial condition. Moreover, negative publicity also could be generated from false, unfounded or nominal liability claims or limited recalls.

Disruptions in the worldwide economy, including changes to foreign trade policies, may adversely affect our business, results of operations and financial condition.

Adverse and uncertain economic conditions, including the impacts of inflation, changes in U.S. foreign trade policies, and governmental tariffs, may impact distributor, retailer and consumer demand for our products. In addition, our ability to manage normal commercial relationships with our suppliers, contract manufacturers, distributors, retailers and creditors may suffer. Consumers may shift purchases to lower-priced or other perceived value offerings during economic downturns and periods of high inflation. In addition, consumers may choose to purchase private label products rather than branded products because they are generally less expensive. Distributors and retailers may become more conservative in response to these conditions and seek to reduce their inventories. The imposition or threat of tariffs or additional sanctions on imports or exports in the U.S., Canada or jurisdictions from which we source our supplies could have an adverse impact on our supply chain, results of operations, or overall business. Additionally, the recent implementation of a 25%an import taxtariff on all steel and aluminum entering the U.S. couldhas adversely impactincreased our operatingcost costsof andgoods businesssold. overall.We expect to continue to see an increase in our cost of goods sold going forward. Our results of operations depend upon, among other things, our ability to maintain and increase sales volume with our existing distributors, retailer customers, our ability to attract new consumers, the financial condition of our consumers and our ability to provide products that appeal to consumers at the right price. In the past, inflationary pressures raised overall supply chain costs and manufacturing and labor costs, which impacted our margins. Prolonged unfavorable economic conditions may have an adverse effect on our sales and profitability.

Agricultural products, including the stevia rebaudiana plant, are vulnerable to adverse weather conditions, including severe rains, drought and temperature extremes, floods and windstorms, which are common but difficult to predict. Agricultural products also are vulnerable to crop disease and to pests, which may vary in severity and effect, depending on the stage of production at the time of infection or infestation, the type of treatment applied and climate conditions. Unfavorable growing conditions caused by these factors can reduce both crop size and crop quality and, in extreme cases, entire harvests may be lost. Additionally, adverse weather or natural disasters, including fires, earthquakes, winter storms, floods, droughts, or volcanic events, could impact manufacturing and business facilities, which could result in significant costs and meaningfully reduce our capacity to fulfill orders and maintain normal business operations. Consumer demand for our products may also be influenced by extreme weather conditions, which may lead to decreased sales. These factors may result in lower sales volume and increased costs of raw materials and manufacturing. Incremental costs, including transportation, may also be incurred if we need to find alternate short-term supplies of products from alternative areas. These factors can increase costs, decrease revenues and lead to additional charges to earnings, which may have a material adverse effect on our business, results of operations and financial condition.

As we work to grow our brand, we intend to enter into new markets, including eventually expanding into countries other than those in which we currently operate. It may be difficult for us to understand and accurately predict taste preferences and purchasing habits of consumers in these new geographic markets as we have little experience with consumer preferences outside the United States and Canada. We will also face increased competition with larger competitors who have stronger established brands in such markets. The political, legal and social systems of certain territories pose difficult challenges related to establishing and maintaining control and ownership of our brand and intellectual property, as well as mitigating the risk of diverted sales to other territories and/or sales diverted into the U.S. It is also costly to establish, develop and maintain international operations and develop and promote our brands in international markets and we may face adverse tax consequences, tariffs, and barriers to trade. Changes in U.S. foreign trade policies, including as a result of the new presidential administration, could lead to the imposition of additional trade barriers and tariffs on U.S. products in foreign jurisdictions. Such changes in U.S. trade policy or in laws and policies governing foreign trade, or actions taken by countries in response to such policies, could materially and adversely affect our business and results of operations. Our expansion may involve expanding into less developed countries, which may have less political, social or economic stability and less developed infrastructure and legal systems. By expanding into other territories, we may be subject to additional product labeling and quality requirements, which could require us to market our products differently or change the formula of certain products to meet local standards in order to commercialize. As we expand our business into new countries, we may encounter regulatory, legal, personnel, technological and other difficulties that increase our expenses and/or delay our ability to become profitable in such countries, which may have a material adverse effect on our business and brand.

A majority of the stevia extract used in our products is currently sourced from twothree suppliers, which we have selected because they meet our specific requirements for a particular blend of leaf compounds. General trade tensions between the U.S. and China, have been escalating, which began escalating in 2018, could have a negative impact on our business. The recent proposed tariff increases on imports from China proposed in 2025 have the potential to disrupt our supply chain and impose additional costs on our business if we cannot properly mitigate the impact of these policies. Additionally, there can be no assurance that the future imposition of any tariffs, changes thereto or potential actions taken by countries in response to the tariffs will not have a material adverse effect upon our results of operations. Any disruption in the stevia extract supply, price, quality, availability or timely delivery could adversely affect our business, performance, and results of operations. Additionally, our contract manufacturers’ sourcing of the majority of the stevia extract used in our products from one supplier increases the risk of significant supply disruptions from local and regional events. For more information regarding contract terms, see the section of this Annual Report captioned “Business—Our Supply Chain.”

Our business’ success depends on third party logistics. We currently work with contract manufacturers to store, ship, and otherwise support our distribution of products to our customers and retail partners. Our ability to meet customer and retail partner expectations, manage inventory, complete sales, and achieve objectives for operating efficiencies and growth depends on the proper operation of these contract manufacturers’ distribution facilities, the development or expansion of additional distribution capabilities, and the timely performance of services by third parties. Problems with our contract manufacturers’ business, finances, labor relations, ability to obtain raw materials, costs, production, insurance and reputation, as well as natural disasters, fires, or other catastrophic occurrences could adversely affect the success of our business. Additionally, the recentimplementation implementationin 2025 of a 25% import taxtax, which subsequently increased to 50%, on all steel and aluminum entering the U.S. could adversely impactimpacted our supply chain and raiseraised operating costs for us.us in 2025 and is expected to continue to affect our results of operations.

We seek alternative sources of stevia extract and other plant-basednatural ingredients to use in our products, but we may not be successful in diversifying the raw materials we use in our products. If we need to replace an existing supplier, there can be no assurance that supplies of raw materials will be available when required on acceptable terms, or that a new supplier would allocate sufficient capacity to our contract manufacturers in order to produce sufficient products to meet our requirements, fill our orders in a timely manner, meet our strict quality standards, and ensure that we can supply enough products to meet consumer demand. Additionally, alternative sourcing could increase our contract manufacturers’ product costs to Zevia, which could decrease our profit margins. If we are unable to manage our supply chain effectively and ensure that our products are available to meet consumer demand, our operating costs could increase and our profit margins could decrease.

We use various ingredients in our beverage products, including stevia sweetener and flavor ingredients relating to consumable products, aluminum cans and other packaging materials. The prices for ingredients, other raw materials, packaging materials and aluminum cans fluctuate depending on market conditions. We have previously experienced challenges in sourcing aluminum for our cans, and could in the future experience similar disruptions in supply of our finished beverage products. The recent implementation byin the new administration2025 of a 25% import taxtax, which subsequently increased to 50%, on all steel and aluminum entering the U.S. could adversely impactimpacted our supply chain and raiseraised operating costs for us.us in 2025 and is expected to continue to affect our results of operations.

We currently rely upon a third-party global transportation brokermanagement company to procure providers to ship our products. If we fail to meet our shipping schedules, we could damage our relationships with distributors and/or retailers, increase our distribution costs and/or cause sales opportunities to be delayed or lost, including losing shelf space in stores. Our utilization of broker services for the shipment of our products is subject to risks that are beyond our control, including availability of trucking capacity and increases in fuel prices, which would increase our shipping costs, and employee strikes or work stoppages and inclement weather, which may impact the ability of our transportation broker to procure delivery services that adequately meet our shipping needs. Any failure to deliver products to our customers in a timely and accurate manner may damage our reputation and brand and may cause us to lose customers.

Additionally, we rely on independent third-party certification, including certifications of certain products or ingredients as “organic” and “Non-GMO” to differentiate the quality of our products from those of our competitors. We must comply with the requirements of the independent third-party organizations or certification authorities in order to maintain these labels. The loss of any certifications could impact consumer’s perception of our brand and products, including the health and wellness attributes, safety, and quality of our products, and could harm our brand reputation and adversely affect our business and results of operations. Failure by us, our contract manufacturers, or our suppliers to comply with applicable laws and regulations or to obtain and maintain necessary permits, licenses, and registrations relating to our operations could subject us to administrative and civil penalties, including significant fines, injunctions, product recalls or seizures, withdrawals, warning letters, untitled letters, restrictions on the production or marketing of our products, or refusals to permit the import or export of products, civil liability, criminal liability or sanctions, or other enforcement actions. Any of these actions would result in a material effect on our operating results and business and financial condition, including increased operating costs. For more information regarding government regulations, see the section of this Annual Report captioned “Business—Government Regulation.”

The regulatory environment in which we operate could change significantly and adversely in the future. For example, the recent change in thecurrent U.S. federal administration has ledeffected and is expected to continue to leadseek to effect, propose, or threaten changes in the leadership of various U.S. federal regulatory agencies and changes or proposed or threatened changes to U.S. federal government policypolicy, thatwhich havehas led to, in some cases, legal challenges as well as uncertainty around the funding, functioning and policy priorities of U.S. federal regulatory agencies and the status of current and future regulations. U.S. federal government policy changes have included seekingefforts to temporarilymodify broadlyor haltrestrict federal funding, seeking to aggressively downsize the U.S.restructure federal government’sagency operations or workforce and instructing federal agencies to reprioritizeadjust, delay, or suspend the implementation or enforcement of certain laws or regulations or to cease operating or enforcing certain laws or regulations.operating. We are unable to predict the extent to which the current U.S. federal administration may continue to impose or seek to impose leadership or policy changes at the U.S. federal regulatory agencies responsible for regulating our business or changes to rules and policies impacting our operations. Any change in manufacturing, labeling, warning, quality, health, or packaging requirements for our products may lead to an increase in costs and interruptions in production, either of which could adversely affect our operations and financial condition. New or revised government laws and regulations and changes in enforcement priorities of regulators could inhibit sales of our products or result in additional compliance costs and, in the event of non-compliance, civil remedies, including fines, enforcement actions, injunctions, withdrawals, recalls or seizures and confiscations, as well as potential criminal sanctions. A change in laws and regulations could also increase our manufacturing costs, if for example our products become subject to new sales taxes. Any of these things may adversely affect our business, results of operations and financial condition.

The marketing and labeling of any food product in recent years has brought increased risk that consumers will bring class action lawsuits and that the FTC and/or state attorneys general will bring legal action concerning the truth and accuracy of the marketing and labeling of the product, seek removal of a product from the marketplace, and/or impose fines and penalties. Products that we sell carry claims as to their ingredients or health and wellness related attributes, including the term “natural” or other express or implied statements relating to the ingredients or health and wellness related attributes of our products. Although the FDA and the USDA each has issued statements regarding the appropriate use of the word “natural,” there is no single, official U.S. government regulation defining the term “natural” for use in the food industry, which is true for many other label statements in the better-for-you and functionally-focused food industry. The lack of regulatory definition for “natural” and other label statements has contributed to legal challenges against many consumer products companies, and plaintiffs have commenced legal actions against several food companies that market “natural” products and/or product ingredients, asserting false, misleading and deceptive advertising and labeling claims, including claims related to genetically modified ingredients. For additional information regarding litigation involving such claims against us, see Note 9 - Commitments and Contingencies in the accompanying Notes to our Consolidated Financial Statements included in this Annual Report. In limited circumstances, the FDA has taken regulatory action against products labeled “natural” that contain synthetic ingredients, chemicals, processing and/or components. As a result of such legal or regulatory challenges, consumers may avoid purchasing products from us or seek alternatives, even if the basis for the claim is unfounded.

We are subject to regulations internationally where we distribute and/or will sell our products. Our products are subject to numerous food safety and other laws and regulations relating to the sourcing, manufacturing, storing, labeling, marketing, advertising and distribution of these products. Currently, our only market outside the United States is Canada. If regulators determine that the labeling and/or composition of any of our products is not in compliance with laws or regulations in Canada or any other jurisdictions we may enter in the future, or if we or our contract manufacturers otherwise fail to comply with applicable laws and regulations in Canada or any other jurisdictions we may enter in the future, we could be subject to civil remedies or penalties, such as fines, injunctions, recalls or seizures, warning letters, untitled letters, restrictions on the marketing or manufacturing of the products, or refusals to permit the import or export of products, as well as potential criminal sanctions. In addition, enforcement of existing laws and regulations, changes in legal requirements and/or evolving interpretations of existing regulatory requirements may result in increased compliance costs and create other obligations, financial or otherwise, that could adversely affect our business, financial condition or operating results.

On June 26,In 2024, we received formal notice from the NYSE that we were not in compliance with Section 802.01C of the NYSE Listed Company Manual because the average closing price of our Class A common stock was less than $1.00 per share over a consecutive 30 trading-day period. On October 1, 2024, we regained compliance with the minimum stock price continued listing standard set forth in Section 802.01C.

While we have regained compliance,compliance with this continued listing standard, there can be no assurance that in the future, we will be able to maintain compliance with the NYSE’s continued listing requirements. In the event that we cannot maintain compliance with the NYSE continued listing standards, we could face significant material adverse consequences, including:

We are a better-for-you beverage company that develops, markets, sells, and distributes naturally delicious, zero sugar beverages. We are a Delaware public benefit corporation and have been designated as a “Certified B Corporation,Corporation” andby B Lab, an independent non-profit organization. We are focused on addressing the global health challenges resulting from excess sugar consumption by offering a broad portfolio of zero sugar, zero calorie, naturally sweetened beverages. All Zevia® beverages are made with a handful of simple, plant-basedsimple ingredients, contain no artificial sweeteners, and are Non-GMO Project verified, gluten-free, Kosher,Kosher and vegan, and include a variety of flavors across Soda, Energy Drinks, and Organic Tea drinks. Our products are distributed and sold principally across the U.S. and Canada through a wide-ranging network of major retailers in the grocery, drug, warehouse club, mass, natural, convenience and e-commerce channels and in natural product stores and specialty outlets. The Company’s products are manufactured and maintained at third-party beverage production and warehousing facilities located in both the U.S. and Canada.

In the second quarter of 2024, we began executing a multi-year, broad-based Productivity Initiative designed to realign our cost structure in order to accelerate our route-to-market evolution and continue to build the Zevia® Brand. This Productivity Initiative is designed to focus on our most critical initiatives including driving growth and innovation in our highest margin carbonated better-for-you beverages, re-align our cost structure to support greater investments in the Zevia® Brand and improve operational excellence while simplifying processes across the organization.

The Productivity InitiativeInitiative, which included a reduction in workforce, has resulted in the following:

Additional restructuringRestructuring charges orrelated cashto expendituresthe mayProductivity beInitiative incurredwere complete as the Company makes further progress on this Productivity Initiative, which we expect to be substantially completed by the first half of December 31, 2025.

We generate net sales from the sales of our products, including Soda, Energy Drinks, and Organic Tea drinks, to our customers, which include grocery distributors, national retailers, convenience retailers, natural products retailers, warehouse club retailers and retailers with e-commerce channels, in the U.S. and Canada.

Historically, costCost of goods sold consists of all costs to acquire and manufacture ourthe products,Company’s products including the cost of the various ingredients, raw materials, packaging, in-bound freight and logisticslogistics, and third-party production fees. Beginning in 2024, our contract manufacturers are responsible for the procurement of raw materials to produce our products, fees—which are thentypically soldincurred at a flat rate per case produced—and all other costs incurred to us as finished goods; therefore, cost of goods sold forbring the year ended December 31, 2024 consists of all costsproduct to purchasesalable our product from our contract manufacturers as a finished good.condition.

Our cost of goods sold is subject to price fluctuations in the marketplace, particularly in the price of aluminum and other raw materials, as well as in the cost of production, packaging, in-bound freight and logistics. Due to the recent implementation of a 25% import tax on all steel and aluminum entering the U.S., we could see an increase in our cost of goods. Our results of operations depend on our contract manufacturers’ ability to arrange for the purchase of raw materials and the production of our products in sufficient quantities at competitive prices. We have long-term contracts with certain suppliers of stevia and certain third-party contract manufacturers governing quality control, regulatory compliance, pricing and other terms, but these contracts generally do not guarantee any minimum purchase commitments to our third-party contract manufacturers. Our third-party contract manufacturers procure packaging and ingredient materials to manufacture our products according to our submitted rolling forecasts, with the initial three months of each forecast generally constituting our purchase commitment.

WeExcluding the impact of tariffs discussed above, we expect our cost of goods sold to increase in absolute dollars as our volume increases, but decrease over time as a percentage of net sales as a result of the Productivity Initiative, our continued focus on cost and efficiency improvements, and as we realize the benefit of scale.

Our selling expenses are expected to decrease as a percentage of sales over time as a result of our Productivity Initiative and our continued focus on cost improvements in our supply chain. Our selling expenses are expected to decrease from the prior year in the short-term, largely due the Productivity Initiative.

Marketing expenses are expected to increase as we invest in brand awareness, which are expected to be partially funded by the Productivity Initiative. In particular, we expect toWe significantly increaseincreased our investment in marketing in 2025, primarily in the first and third quarters,order to help build our brand, with a focus on driving trialawareness and customer conversions.conversations, and we expect this increased investment to continue in 2026.

General and administrative expenses include all salary and other personnel expenses (other than equity-based compensation expense) for our employees, including employees related to management, marketing, sales, product development, quality control, accounting, information technology and other functions. Our ongoing general and administrative expenses are expected to remain relatively flat as a percentage of net sales over time.time, but may fluctuate in any given quarter as a result of timing and amount of variable compensation expense.

Equity-based compensation expense consists of the recorded expense of equity-based compensation for our employees and, if any, for certain consultants and service providers who are non-employees. We record equity-based compensation expense for employee grants using grant date fair value for RSUs or a Black-Scholes valuation model to calculate the fair value of stock options by date granted. Equity-based compensation cost for RSU awards is measured based on the closing fair market value of the Zevia LLC Class B unit or the Zevia PBC Class A common stock, as applicable, on the date of grant. Our equity-based compensation expense is expected to remain relatively consistent in absolute dollars but decline as a percentage of net sales over time.

Restructuring expenses include employee severance and benefit costs to terminate a specified number of employees as well as costs for restructuring consulting services, impairment loss of certain assets, contract termination costs and other related charges designed to reduce costs and improve efficiency while continuing to invest in our brand and related initiatives. Additional restructuringRestructuring charges orrelated cash expenditures may be incurred as the Company makes further progress onto the Productivity Initiative,Initiative whichwere wecomplete expect to be substantially completed by the first halfas of December 31, 2025.

Net sales were $161.3 million for the year ended December 31, 2025 as compared to $155.0 million for the year ended December 31, 20242024. asEquivalized comparedcases tosold $166.4were 12.7 million for the year ended December 31, 2023.2025 Equivalizedas casescompared sold wereto 12.1 million for the year ended December 31, 2024 as compared to 12.7 million for the year ended December 31, 2023.2024. The decreaseincrease in net sales was primarily due to aan decreaseincrease in the number of equivalized cases sold, which resulted in $9.8$8.1 million lowerhigher net salessales, andwhich was largely caused by lost distribution in our club channel and one customer in our mass channel, as well as the discontinuationresult of Kids and Mixers product lines, partially offset by expanded distribution at one customer in the mass channel which was partially offset by reduced distribution in the club channel, and apricing decrease in net salesincreases of $1.6$0.9 million, partially offset by higher allowance for incentives and discounts of $2.8 million resulting from greater promotional levels at retailers as well as increased promotions in order to liquidate excess and obsolete inventory.retailers. We define an equivalized case as a 288 fluid ounce case.

Gross profit was $77.4 million for the year ended December 31, 2025 as compared to $71.9 million for the year ended December 31, 2024 as compared to $74.8 million for the year ended December 31, 2023.2024. The decreaseincrease in gross profit of $2.8$5.5 million, or 3.8%,7.6%, was primarily due to lowerhigher volumes, unfavorableselling price increases, favorable unit costs, and lower inventory write-downs, partially offset by increased spend on promotional activity, partially offset by lower inventory write-downstariffs and favorable productchannel mix.

Gross margin for the year ended December 31, 20242025 improved to 46.4%48.0% from 44.9%46.4% in the prior-year period. The increase was primarily due to favorable unit costs, net of tariffs, selling price increases and lower inventory write-downs and favorable product mix,write-downs, partially offset by unfavorable unit costs and increased spend on promotional activity.activity, tariff and channel mix.

General and administrative expenses were $30.0 million for both the yearyears ended December 31, 20242025 asand compared to $31.5 million for the year ended December 31, 2023.2024. The results were driven by higher accrued variable compensation expense, offset by a decrease ofin $1.5costs million, or 4.7%, was primarilyas a result of our Productivity Initiative discussed above.Initiative.

Equity-based compensation expense was $3.8 million for the year ended December 31, 2025 as compared to $5.0 million for the year ended December 31, 2024 as compared to $8.3 million for the year ended December 31, 20232024, primarily related to outstanding equity-based awards being recognized over the remaining service periods of the awards. The decrease of $3.3$1.2 million was primarily due to a $3.7$1.7 million decrease related to the accelerated method of expense recognition on certain equity awards issued in connection with the Company’s IPO in 2021, partially offset by equity-based compensation expensesexpense related to newnewly issued equity awards granted.awards.

Restructuring expenses were $2.2 million for the year ended December 31, 2025 as compared to $2.1 million for the year ended December 31, 2024, which primarily includes employee related severance costs, restructuring consulting services, impairment loss of certain assets as a result of sublease agreement and costs to exit two of our third-party warehouse and distribution facilities. Restructuring charges would be included within general and administrative expenses if not presented as a separate line item in the consolidated statements of operations and comprehensive loss.

On February 22, 2022, we obtained a revolving credit facility (the “Secured Revolving Line of Credit”) by entering into a Loan and Security Agreement with Bank of America, N.A (the “Loan and Security Agreement”). Under the Secured Revolving Line of Credit, we may draw funds up to an amount not to exceed the lesser of (i) a $20 million revolving commitment and (ii) a borrowing base which is comprised of inventory and receivables. Up to $2 million of the Secured Revolving Line of Credit may be used for letter of credit issuances with the option to increase the commitment under the Secured Revolving Line of Credit by up to $10 million, subject to certain conditions. The Secured Revolving Line of Credit matures on February 22, 2027. During the first quarter of 2024, the Company drew $8 million on the Secured Revolving Line of Credit which was subsequently repaid in the same period. As of December 31, 2024,2025, there was no amount outstanding on the Secured Revolving Line of Credit. The Secured Revolving Line of Credit is secured by a first priority security interest in substantially all of the Company’s assets.

Loans under the Secured Revolving Line of Credit bear interest based on either, at our option, the BloombergTerm Short-TermSecured BankOvernight Yield IndexFinancing rate plus an applicable margin between 1.50% to 2.00% or the Base Rate (customarily defined) plus an applicable margin between 0.50% to 1.00% with margin, in each case, determined by the average daily availability under the Secured Revolving Line of Credit. The Loan and Security Agreement was amended on September 30, 2024 to replace the Bloomberg Short-Term Bank Yield Index, which was discontinued on November 15, 2024, with the Term Secured Overnight Financing rate, effective November 20, 2024.

Net Cash (Used in) Provided by Investing Activities

Net Cash ProvidedUsed byin Financing Activities

Net cash providedused byin financing activities of less than $0.1$0.3 million for the year ended December 31, 20232025 was primarily due to financing costs paid partially offset by proceeds from the exercise of stock options.

We calculate Adjusted EBITDA as net loss adjusted to exclude: (1) other income (expense), net, which includes interest (income) expense and foreign currency (gains) losses, (2) (benefit) provision for income taxes, (3) depreciation and amortization, (4) equity-based compensation, and (5) restructuring expenses, and (6) certain litigation expenses. Also, Adjusted EBITDA may in the future be adjusted for amounts impacting net income related to the TRA liability and other infrequent and unusual transactions.

Adjusted EBITDA is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP. Some of the limitations of Adjusted EBITDA include that (1) it does not properly reflect capital commitments to be paid in the future, (2) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA does not reflect these capital expenditures, (3) it does not consider the impact of equity-based compensation expense, including the potential dilutive impact thereof, and (4) it does not reflect other non-operating expenses, including interest (income) expense, foreign currency (gains)/losses, and restructuring.restructuring expenses, and (5) it does not reflect certain litigation expenses that we have determined (a) to arise outside of the ordinary course of business, (b) are not reflective of our ongoing operating activities, and (c) are infrequent or unusual based on considerations which we assess regularly, such as frequency of similar cases that have been brought to date, or that are expected to be brought within two years, the complexity of the case, the nature of the remedies sought, the counterparty involved and overall litigation strategy. In addition, our use of Adjusted EBITDA may not be comparable to similarly-titled measures of other companies because they may not calculate Adjusted EBITDA in the same manner, limiting its usefulness as a comparative measure. Because of these limitations, when evaluating our performance, you should consider Adjusted EBITDA alongside other financial measures, including our net income (loss) and other results stated in accordance with U.S. GAAP.

Our business is subject to various risks, including those described in the section titled “Risk Factors” in Part I, Item 1A of our Annual Report.Report Otherand thanPart II, Item 1A of our Quarterly Report on Form 10-Q for the followingquarterly riskperiod factor,ended March 30, 2026 (the “Q1 2026 Form 10-Q”). Except as set forth in the Q1 2026 Form 10-Q, there have been no material changes from the risk factors disclosed in Item 1A of our Annual Report.

Key Events During the First QuarterHalf of 2026

In the second quarter of 2026, the Company initiated a restructuring plan aimed at improving the efficiency of its warehouse operations and optimizing its warehouse footprint. The plan includes transitioning to a more efficient warehouse location and streamlining related logistics activities. TheFor the three and six months ended June 30, 2026, the Company estimatesrecognized that$1.0 totalmillion of costs associated with this restructuring will be approximately $0.9 million, primarily consisting of contract termination costs and freight costs to transfer inventories. Additional restructuring charges or cash expenditures may be incurred as the Company makes further progress on this initiative, which we expect to be substantially completed by the third quarter of 2026. Once the transition is complete, the Company expects the restructuring to result in annualized cost savings of approximately $2.4$4.1 million.

The following summarizes the components of our results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025, respectively.

Our cost of goods sold is subject to price fluctuations in the marketplace, particularly in the price of aluminum and other raw materials, as well as in the cost of production, packaging, in-bound freight and logistics. Due to the implementation of tariffs, we saw an increase in our cost of goods sold throughout 2025 and in the first quarterhalf of 2026, and expect a continued increase in our cost of goods going forward.

Our selling expenses are expected to increase in the short-term due to thehigher effectfreight ofcosts driven by increased fuel rates, which have been affected by the ongoing conflicts in the Middle East. ExcludingOver thetime, effectwe of conflicts in the Middle East, ourexpect selling expenses are expected to decrease as a percentage of net sales over time as a result of our Productivity Initiative and our continued focus on supply chain cost improvementsimprovements, including the warehouse restructuring plan, although fluctuations in ourfuel supplyrates chain.may affect the timing and extent of these anticipated savings.

Equity-based compensation expense consists of the recorded expense of equity-based compensation for our employees and, if any, for certain consultants and service providers who are non-employees. We record equity-based compensation expense for employee grants using grant date fair value for RSUs and PSUs or a Black-Scholes valuation model to calculate the fair value of stock options by date granted. Equity-based compensation cost for RSU and PSU awards is measured based on the closing fair market value of the Zevia PBC Class A common stock, on the date of grant. Our equity-based compensation expense is expected to remain relatively consistent in absolute dollars but decline as a percentage of net sales over time.

Other (expense) income, net consists primarily of interest income (expense), and foreign currency (loss) gains.

Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended MarchJune 31,30, 2025

Net sales were $46.1$45.0 million for the three months ended MarchJune 31,30, 2026 as compared to $38.0$44.5 million for the three months ended MarchJune 31,30, 2025. Equivalized cases sold were 3.63.4 million during the three months ended MarchJune 31,30, 2026 as compared to 3.03.5 million during the three months ended MarchJune 31,30, 2025. The increase in net sales was primarily due to pricing actions which increased net sales by $2.2 million, partially offset by a 20.4%3.7% increasedecrease in the number of equivalized cases sold, which resultedreduced net sales by $1.7 million. The decrease in $7.8volume millionprimarily higher net sales, which was largelyreflected the resultcomparison of expandedagainst distribution at one customerload-ins in the clubprior-year channel as well as higher volumes in the mass and e-commerce channels, and lower allowance for incentives and discounts of $0.7 million, partially offset by pricing declines as a result of channel mix of $0.4 million.period. We define an equivalized case as a 288 fluid ounce case.

Cost of goods sold was $23.8$23.0 million for the three months ended MarchJune 31,30, 2026 as compared to $19.0$22.8 million for the three months ended MarchJune 31,30, 2025. The increase of $4.8$0.1 million, or 25.3%,0.6%, was largely due to increased volumes which resulted in $3.9 million of higher costs of goods sold, unfavorable unit costs of $0.8$1.0 million driven by tariffs,aluminum whichtariffs. This increase was slightlypartially offset by improvements in unit costs related to the Productivity Initiative,Initiative and higherdecreased write-downsvolumes relatedwhich toresulted excessin and$0.9 obsolete inventorymillion of $0.2lower million,costs mainlyof relatedgoods to new packaging design.sold.

Gross profit was $22.3$22.0 million for the three months ended MarchJune 31,30, 2026 as compared to $19.0$21.7 million for the three months ended MarchJune 31,30, 2025. The increase in gross profit of $3.3$0.3 million, or 17.1%,1.5%, was primarily dueattributable to higherthe volumesbenefit andof lowerpricing spend on promotional activity,actions, partially offset by unfavorable unit costs,costs higherdriven inventoryby write-downs, and channel mix.tariffs.

Gross margin for the three months ended MarchJune 31,30, 2026 decreasedincreased to 48.4%48.9% from 50.1%48.7% in the prior-year period. The decreaseincrease was primarily duedriven toby unfavorablepricing unit costs, higher inventory write-downs, and channel mix,actions, partially offset by lowerunfavorable spendunit oncosts promotionaldriven activity.by tariffs.

The decreaseincrease in marketing expenses of $1.1$0.3 million was duedriven by increased investments to thedrive timingbrand of marketing campaigns.awareness.

Equity-based compensation expenses were $0.9$2.1 million for the three months ended MarchJune 31,30, 2026 as compared to $0.7$1.0 million for the three months ended MarchJune 31,30, 2025, primarily related to outstanding equity-based awards being recognized over the remaining service periods of the awards. The increase of $0.2$1.1 million was primarily driven by forfeitures during the three months ended March 31, 2025 relatedattributable to the$1.0 reductionmillion in workforce and newof equity awards duringgranted in connection with the threeCompany's monthsbrand endedendorsement Marchagreement 31,with 2026.Cardi B.

Restructuring expenses were zero for the three months ended March 31, 2026, as compared to $2.1$1.0 million for the three months ended MarchJune 31,30, 2026, as compared to less than $0.1 million for the three months ended June 30, 2025. The restructuringRestructuring expenses in the prior yearcurrent-year period primarily consisted of contract termination costs and freight costs incurred to transfer inventory as part of the Company's restructuring plan. Restructuring charges for the three months ended June 30, 2026, would be included employeewithin relatedselling severanceand costs.marketing expenses if not presented as a separate line item in the unaudited consolidated statements of operations and comprehensive loss.

As of MarchJune 31,30, 2026, we had $26.6$28.5 million in cash and cash equivalents. We believe that our cash and cash equivalents as of MarchJune 31,30, 2026, together with our operating activities and available borrowings under the Secured Revolving Line of Credit (as defined below), will provide adequate liquidity for ongoing operations, planned capital expenditures and other investments beyond the next 12 months.

On August 12, 2025, we and our wholly-owned subsidiary, Zevia LLC, entered into an Equity Distribution Agreement (the “Agreement”) with Piper Sandler & Co. as sales agent (the “Agent”), pursuant to which we may sell from time to time through the Agent, shares of Class A common stock, par value $0.001 (the “Common Stock”), having an aggregate gross sale price of up to $20 million (the “Offering”). Sales of Common Stock, if any, under the Agreement may be made in any transactions that are deemed to be an “at-the-market offering” as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended. In addition, with our prior consent and subject to the terms it may establish, the Agent may also sell the Common Stock by any other method permitted by law, including privately negotiated transactions. Under the Agreement, we will pay the Agent a commission equal to 3.0% of the gross sales price of the Common Stock sold in the Offering. The Agent has agreed to use its commercially reasonable efforts to sell the shares of common stock in the Offering, subject to the terms of the Agreement. During the period from August 12, 2025 to MarchJune 31,30, 2026, we elected not to issue shares under this Agreement.

On February 22, 2022, weZevia LLC (the “Borrower”) obtained a revolving credit facility (the “Secured Revolving Line of Credit”) by entering into a Loan and Security Agreement with Bank of America, N.AN.A. (the “Loan and Security Agreement”). UnderThe Borrower may draw funds under the Secured Revolving Line of Credit, we may draw fundsCredit up to an amount not to exceed the lesser of (i) a $20 million revolving commitment and (ii) a borrowing base which is comprised of inventory and receivables. Up to $2 million of the Secured Revolving Line of Credit may be used for letter of credit issuances withand the Borrower has the option to increase the commitment under the Secured Revolving Line of Credit by up to $10 million, subject to certain conditions. The Secured Revolving Line of Credit matures on February 22, 2027. On May 15, 2026, the Borrower entered into a First Amendment to the Loan and Security Agreement which extended the maturity date to February 22, 2030. As of MarchJune 31,30, 2026, there was no amount outstanding on the Secured Revolving Line of Credit. The Secured Revolving Line of Credit is secured by a first priority security interest in substantially all of the Company’s assets.

Loans under the Secured Revolving Line of CreditCredit, as amended, bear interest based on either, at ourthe Borrower's option, the Term Secured Overnight Financing rate plus an applicable margin between 1.50% to 2.00% or the Base Rate (customarily defined) plus an applicable margin between 0.50% to 1.00% with margin, in each case, determined by the average daily availability under the Secured Revolving Line of Credit.

Under the Secured Revolving Line of CreditCredit, weas amended, the Borrower must satisfy athe following financial covenantcovenants: requiring(i) until the Borrower has achieved a fixed charge coverage ratio of at least 1.00 to 1.00 for two consecutive fiscal quarters (or six consecutive months, as applicable), a minimum liquidity requirement of at least $7 million, at all times, and (ii) a minimum fixed charge coverage ratio of 1.00 to 1.00 as of the last day of any fiscal12 quartermonth period following the occurrence of certain events of default that are continuing or any day on which availability under the Secured Revolving Line of Credit is less than the greater of $3 million and 17.5% of the borrowing base, and must again satisfy such financial covenant as of the last day of each fiscal12 quartermonth period thereafter until such time as there are no events of default and availability has been above such threshold for 30 consecutive days. As of MarchJune 31,30, 2026, the CompanyBorrower was in compliance with itsthese financial covenant.covenants.

Net cash provided by operating activities of $1.6$4.0 million for the threesix months ended MarchJune 31,30, 2026 was primarily driven by a net increase in cash related to changes in operating assets and liabilities of $2.8$5.6 million and non-cash expenses of $1.2$3.6 million primarily related to equity-based compensation and depreciation and amortization expense, partially offset by a net loss of $2.4$5.3 million. Changes in cash flows related to operating assets and liabilities were primarily due to a $2.9 million decrease in inventories ofresulting $5.2 million due to sales and decreased production offrom inventory asmanagement inventory levels are managed andinitiatives, decreased accounts receivable of $2.0$1.1 million driven by timing of collections, partially offset by a net decrease inincreased accounts payable, accrued expensesexpenses, and other current liabilities of $3.8$3.2 million due to timing of purchases and decreased production of inventory andproduction, partially offset by increased prepaid expenses and other assets of $0.4$1.2 million driven by timing of payments.payments and decreased operating lease liabilities of $0.4 million.

Net cash used in operating activities of $2.9$4.3 million for the threesix months ended MarchJune 31,30, 2025 was primarily driven by a net loss of $6.4$7.0 million, partially offset by non-cash expenses of $1.1$2.5 million primarily related to equity-based compensation and depreciation and amortization expense, and a net increase in cash related to changes in operating assets and liabilities of $2.3$0.2 million. Changes in cash flows related to operating assets and liabilities were primarily due to a decrease in accounts receivable of $2.0 million largely due to timing of payments and a decrease in inventories of $1.5$2.9 million due to decreased production of inventory as inventory levels are managed, partially offset by increasedan prepaidincrease expensesin andaccounts other assetsreceivable of $0.9$2.3 million drivenlargely bydue timingto ofthe payments,increase andin net sales, a net decrease in accounts payable, accrued expenses and other current liabilities of $0.3$0.2 million due to timing of purchases and decreased production of inventory.

Net cash used in investing activities of $0.3$0.4 million for the threesix months ended MarchJune 31,30, 2026 was primarily due to purchases of quality control equipment for use in ongoing operations.

Net cash used in investing activities of less than $0.1 million for the threesix months ended MarchJune 31,30, 2025 was primarily due to purchases of computer equipment and quality control equipment for use in ongoing operations.

Net Cash (Used in) Provided by Financing Activities

Net cash used in financing activities of $0.1$0.4 million for the threesix months ended MarchJune 31,30, 2026 was primarily due to equity financing costs paid.paid of $0.2 million and payments of debt issuance costs of $0.2 million.

On April 16, 2026, the Company entered into a new lease for its corporate headquarters office with total square footage of 10,045 square feetfeet. withThe anticipatedlease commencementhas datea term of December 28, 2026 for 64 full calendar months.months commencing on the lease commencement date, which is expected to occur in the fourth quarter of 2026. Total rent obligations under the new lease are expected to be approximately $2.2 million.

Our leases generally consist of long-term operating leases, which are payable monthly and relate to our office space. For further discussion on our debt and operating lease commitments as of MarchJune 31,30, 2026, see the sections above including Note 7, Debt, and Note 8, Leases, included in the accompanying unaudited condensed consolidated financial statements of this Quarterly Report.

Our inventory purchase commitments are generally short-term in nature and have ordinary commercial terms. We did not have any material long-term inventory purchase commitments as of MarchJune 31,30, 2026. Our contract manufacturers are obligated to fulfill against purchase orders that are aligned with our forecast based on terms and conditions of the contract. Our forecasts provided to our contract manufacturers are short term in nature and at no time extend beyond a year.